Chennai: Despite the initial negative impact on trade uncertainty, manufacturing reshoring and trade regionalization strategies can add about 1.3 percentage points to India’s real GDP over the baseline forecast of 5.7 per cent over the next decade, finds S&P Global.India remains the world’s fastest-growing large economy despite a slowdown in real GDP growth in fiscal 2024-25. It has moderate dependence on external trade for growth, which cushions it somewhat from ongoing shifts in global trade and tariff policies, though it is not immune to the rising trade protectionism.While manufacturing value added accounts for a modest 17.2 per cent of the country’s real GDP, the government has implemented targeted policy interventions to build domestic manufacturing capacity and strengthen India’s role in global supply chains.The Production Linked Incentive schemes introduced since March 2020 have contributed to growth and boosted exports in several manufacturing segments, including electronics, pharmaceuticals and automobiles. Notably, mobile phone exports, valued at zero in 2016, soared to $20.4 billion in 2024, growing 44 per cent from 2023 alone, after Apple shifted part of its mobile phone manufacturing from China to India. The private sector also remains optimistic about growth opportunities in India’s manufacturing sector.HSBC PMI data highlights the domestic manufacturing sector’s resilience to recent global headwinds compared with other major economies. The country’s headline manufacturing PMI readings over the past 12 months substantially exceeded global averages, supported by buoyant demand, increased hiring and inventory buildup.As economies adapt to evolving trade dynamics and tariff challenges, India can capitalize on this momentum for accelerated manufacturing growth and greater global supply-chain integration. A strategic shift towards local sourcing, proximity to end-markets, and enhanced regional integration should attract additional investment to the sector, accelerating India’s technological advancement and manufacturing competitiveness and creating additional high-quality manufacturing jobs.Companies are expected to relocate their operations to regions that offer competitive advantages, with India emerging as a key destination. Further, improvements in logistics efficiency, labour market deregulation and financial resource availability would create a favourable environment for manufacturing investment. This, in turn, would lead to increased economic efficiency, greater manufacturing output, higher manufacturing employment and stronger economic growth overall.They could add about 1.3 percentage points to India’s real GDP by end of fiscal 2034-35, compared with S&P’s baseline forecast. S&P projects the country’s real GDP growth to average 5.7 per cent over the next decade.